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Tucows exits its domain name portfolio

Company no longer holds a portfolio of domains for the secondary market.

Tucows logoTucows (NASDAQ: TCX) released its Q3 earnings yesterday. You can see the numbers here (pdf), but they aren’t the headline for the domain segment. Instead, it’s this: after many years of owning its a domain portfolio, Tucows has exited that business.

It still owns a portfolio of surname domain names that it uses for its Realnames email service. But it no longer holds a portfolio of domain names to monetize via pay-per-click and to sell on the aftermarket.

It sold the remainder of its portfolio over the past few months. It made a bulk sale of $1.9 million during the third quarter and $1.4 million after the quarter ended. (I believe that GoDaddy was the buyer.)

Tucows CEO Elliot Noss explained the change in the aftermarket business in the latest pre-recorded investor conference call (pdf):

We have owned our own portfolio for a little over a decade now, and it’s been a great tactical business, consistently generating sales in the range of $2 and $3 million annually, with relatively little ebb and flow, and with some years punctuated by a larger bulk sale or two.

Throughout this period, two things were true. We were always adding to the portfolio through the expiry stream and we were always needing to increase the transaction volume in order to maintain the same levels. At the same time, the underlying demand in this segment was declining as the increasing sophistication of SEO and related online advertising technologies reduced the returns on direct navigation domain names. We have all witnessed the maturation of online advertising technologies over this time as they evolved from a relatively blunt instrument to an amazing precision tool that now tracks every element of our life with great accuracy and provides incredibly efficient, if sometimes annoying, results. Through this maturation, the value of domain name traffic has declined to the point where we made the decision, starting a couple of years ago, to first reduce our exposure to this segment, and  finally, to exit it completely. We do want to note that the value of a premium domain name, as a name for a company itself, has never waned — it’s at least what it was when we started this exercise –and might even be up over time. Despite the fact that premium names was the segment of the market that we focused on, the value of leads was the primary driver for the health of this segment.

Tl;dr: Direct navigation and domain parking went to shit, which has dramatically changed the domain name investing business.

There’s some good news for domain investors in this announcement. Investors were annoyed that Tucows would cherry-pick expiring inventory for its own portfolio. Now it’s sending all of it to GoDaddy Auctions.

Dynadot Expired Auctions. Now offering installment payments. View auctions.

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    • praveenchidaboyina says

      *Soon or later, they will sell domain name business as well!
      Since they are sending all expired domains to Godaddy for better earnings in the short term but long term, they are going to loose more domain names!

  1. snoopy1267 says

    Nice to read some very honest reporting on parking and EMD domains. Demand for those types of domains are well down (though they still sell but with much lower interest) and parking yes, “went to shit”.

  2. Don Hulio says

    Good riddance!
    Go to YUMMYNAMES.com and try to search for a domain
    How did they sell any names like that?
    These guys have been idiots for years
    Initially hiding behind this bogus brand and not revealing their relationship to Tucows.
    Stealing from their clients by way of transfer fulfillment! How frustrating for guys who let their names expire and had no way to get them back! Tucows has historically been an underperforming company with poor leadership. With Noss as the boss it’s a Shareholders loss
    Horrible company
    Horrible management
    Probably horrible phone services too

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